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Unfair And Deceptive Practices: Entertainment For Everyone But The Dealer

One of my local car dealers keeps me entertained with his direct mail advertising pieces. Every time one arrives in my mailbox, I fantasize about being either the Attorney General or a plaintiff’s lawyer.

The latest one actually wasn’t all that bad, but it contained plenty of ammunition for someone wanting to attack it. You will recall that the most potent weapon that plaintiffs’ lawyers can bring to bear is a state “unfair and deceptive acts or practices,” or “UDAP”, law. Nearly every state has such a law, and Maryland, my home state, is no exception. Plaintiffs’ lawyers love UDAP laws because, while they typically ban certain described acts and practices, they usually have sweeping language that prohibits anything that is “unfair” or “deceptive.”

With this sweeping language in mind, let’s look at what the Honda dealer sent me.

The mailer announced something called the “Extravaganza Savings Event.” Supposedly, I could buy a car “without negotiation” and “as if I were a supplier” of the manufacturer. The sale was “due to excess inventory,” and the cars were “drastically reduced.” The offer was “for one day only.” Evidently, the sale applied to used cars, as well, since the mailer announced that I was “entitled to obtain your new or previously owned vehicle at a price that is substantially lower than the retail-selling price.” “Finance representatives” were to be on hand to make sure that I would be offered “the best terms.” The mailer screamed that “$1,000,000 of previously owned vehicles must be reduced from inventory.” After the sale date, supposedly “all vehicles that remain unsold will return to normal market prices (MSRP).”

So, you say, “What’s wrong with the mailer? The dealer’s having a sale. What’s the big deal?”

Here’s how I would look at the mailer if I were the AG or a plaintiff’s attorney.

I’d wonder whether the “without negotiation” language was an attempt to discourage normal price haggling.  I’d be curious as to the level of the dealer’s inventory. Was it actually “excess” on the sale day, or was it at normal levels?

Were cars sold on the sale date sold at “drastically reduced” prices, “substantially lower than the retail selling price,” or did customers pay about what they usually paid on other days? Could I have bought a car on the following day at the same price or was the sale truly for “one day only”?

Who were the “finance representatives”? The term sounds like they are bank or finance company employees, but are they really the dealership’s usual finance people or people employed by a marketing company running the event for the dealer? If I was to be offered “the best terms,” does that mean that the dealer would not mark up the bank and finance company buy rates on that day?

Who or what is requiring that $1,000,000 of used cars has to be reduced from inventory? Will in fact the dealer sell cars after the sale date only at “MSRP”?

Remember, the test that the AG will use or that the plaintiff’s lawyer will urge the court to use is whether each one of these statements is literally true, or even if literally true, is deceptive. Remember also that both the AG and the plaintiff’s lawyer will be able to force the dealer to provide detailed information that will permit the AG or the court to judge the truthfulness and deceptiveness, if any, of these statements.

Now, it’s possible that the mailer’s statements would survive an attack by the bad guys. Call me cynical, but I’d bet that at least some of these statements could be successfully attacked.

NADA’s Used Car Industry Report, 2007, on page 28, shows that dealers in 2006 spent over three times as much on advertising as they did on accounting and legal services. Maybe dealers ought to consider spending a few more bucks by having your ads and mailers reviewed by your friendly local lawyer.

Vol 5, Issue 9


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